I follow tech news, not like the wannabe investor that I am, but as an avid consumer and social participant.
I will quickly say that a lot of what’s going on is ludicrous at the moment and have two major qualms:
1) the playing field is not leveled or fair and in fact the majority is getting fucked with increased income disparities
2) the valuations are insane and unsound.
Let’s start with the second of my 2 problems. Apparently the historical average P/E for publicly traded companies is around 15 and that might be reasonable for many of them considering its an average created by the bull and bear, the rich and the poor, etc… Where my problem starts to arise is with companies that don’t come anywhere near that average and instead they rely heavily on future earning projections, which again can be reasonable thinking in some situations, but not when you’ve got more than a handful of companies valued over a billion dollars and all relying on the same growth assumptions. If Twitter and FB both need the same eye balls to be worth $x or $y, then at one point or another it will turn into a zero-sum game. Throw in 5-10 other players across different industries with these overlapping conditional valuations and we’ve all of a sudden found ourselves outside of reality. At one point or another, the air will run out, whether as a response of the slowing Chinese economy that has provided the US with a gush of dollars not seen since the oil boom, or some other cause.
I’m sensitive to injustice. I can’t help it. I grew up with Voltaire and was a bean counting prick for a while. While I am criticizing many new investment opportunities and am not a huge fan of the over aggressive growth seen with companies such as Uber (im sure you’ve heard a story or 2). It’s great that there are many people fighting to make investing easier for non accredited investors and also easier for startups and ideas to raise money (kickstarter, indiegogo, fundrise, etc….). That being said, when you see $500 million dollar financing rounds for companies like Spotify, these rounds make it impossible for the middle class to get involved and are a way for the rich to get richer thanks to the consumers who have massively adopted the technology. I have never and never will wear FUBU, but the statement for us, by us resonates strongly with me. I want to live in a society where what you do to create value is tied into your consumption. You consume what you produce and vice verse. This type of behavior brings us closer to ensuring a positive economic evolution for our society.
The above issues are not super hashed out or backed by any real direct source, but I’ll still stand by them and happily enter further discussion with anyone on the subjects.